The Gig Economy is Growing, Are You Keeping Up?

For a growing number of people, a visit to the city might involve an excursion to the museum, a visit to a local hotspot, and a ride in an Uber or Lyft to travel between the two. Where taxis used to fill the transportation void not that long ago, independent contractors driving for ride-sharing services are now picking up riders and taking them where they need to go; often more cheaply than their traditional, yellow counterparts.

The same goes for staying overnight while traveling. A hotel used to be the primary option for casual travelers, but in recent years has given way to home-sharing, where rooms, apartments and entire homes are available to visitors at lower rates. Homeowners with spare rooms are taking advantage of their idle space to generate additional income.

While renting a room in your home or using your car to drive someone back to their house on Saturday night might not seem like it has a lot to do with the way we work, there are several distinct lessons worth learning and taking advantage of. The rise of the sharing, or gig, economy has been built off the back of using readily available resources to provide goods and services to others, often for lower prices. For those selling their products or services, the gig economy allows entrepreneurs to set their own prices, create their own schedules, and even choose who they want to work with or sell to.

The Changing and Growing Gig Economy

The rise of the Internet is having a massive impact on the way companies and people do business. Platforms like Airbnb, Uber, and Lyft have become go-to options for budding entrepreneurs looking to make additional income in their spare time or start a full-time gig if they’re in the right location. For example, according to applicant data compiled by Earnest, a U.S.-based student loan refinancing company, the average Airbnb renter earns more than $900 each month renting out their spare rooms or homes online. While the median monthly amount earned by these short-term renters is much lower, sitting just under $450, the money is a welcome supplement to their regular jobs.

Those changes to how goods and services are provided have caused ripples across nearly every industry. For example, while Airbnb has been a boon for independent sellers looking to make a few spare dollars by renting out unused space, the reverberations have been felt across the hotel industry. Hotel chains are now focusing more on loyalty programs and better amenities to keep pace with upstart platforms and are beginning to invest in other properties, like bed and breakfasts.

Other gig platforms like Fiverr and TaskRabbit, allow users to perform one-time tasks as needed. Although Fiverr users average only about $100 each month, these workers offer everything from web design and copywriting to marketing and business planning. TaskRabbit users earn an average of close to $400 monthly performing physical tasks like moving furniture, handyman jobs and installation work.
Although the amounts earned by these gig workers tend to be fairly low, the money is often meant to bring in additional income on top of a more traditional 9 to 5 job. With that said, some of those who are successful can earn thousands of dollars each month. For those with marketable skills, a few hours here and there to help out a small business or drive people home on a busy Saturday night is well worth the cost of their time.

What Does This Mean For Business?

For small business owners, the thought of bringing in several independent contractors to perform tasks versus having a full-time employee in the office might seem a little concerning. However, as freelancers, consultants, and others continue streaming into the market, businesses will have to adapt to the changing trends. Proponents of the sharing economy suggest small businesses that aren’t taking advantage of these skilled workers are missing out on massive savings and better quality of work. These same proponents contend that one of the main benefits of the sharing economy is it promotes boosting the bottom line by allowing others access to our unused items, space, and time.

Unlike an hourly or salaried employee who may have varying levels of productivity based on the day, their mood and myriad other factors, a contract employee hired through the sharing economy is often paid based on performance. For a small business with a tight budget, outsourcing tasks as they arise is an easy way to get work done while having a minimal impact on the bottom line. The same can be said for unused space in a building or idle machines in the office. Rather than letting those items and spaces go unused, costing additional money without benefits, there are ways to still generate revenue off what you’re not using.

Of course, small businesses should also be aware of several pitfalls associated with the growth of the sharing economy, including the dilemma of how to classify these workers. Incorrectly identifying workers as independent contractors when they should actually be classified as employees who are subject to taxes and benefits can lead to tricky situations, and may leave those businesses open to lawsuits.

There’s also the issue of trust-building. The sharing economy is largely based on trust, whether you’re trusting a stranger to safely drive you to the airport in an Uber or expertly design your company’s logo through the use of Fiverr. As the sharing economy continues growing and evolving into better versions of itself, both companies and freelancers will build trust in one another to keep the processes running smoothly and ensure quality work is being done and appropriately paid for.

The Future of Freelancing

The sharing economy is not going anywhere. In fact, it’s predicted to explode over the next decade. According to PricewaterhouseCoopers, the global revenues from the sharing economy are projected to increase from $15 billion in 2014 to roughly $335 billion is 2025 and sparked by five sectors, including staffing, ridesharing, and travel industries.

But, like any disruptor, the sharing economy is going to go through its fair share of growing pains. Businesses and HR departments will go through similar pains in an attempt to navigate a new world where help is only a button click away. It might not seem like it, but the future is here and businesses should hop on board now before they get left behind.